AFTER THE DRAFT HAD BEEN PUBLISHED IN OCTOBER

The Ministry of the Economy withdraws its royalties proposal and announces a thorough study

06 dec. 2017 English Section
A.A. (translated by Cosmin Ghidoveanu)
The Ministry of the Economy withdraws its royalties proposal and announces a thorough study

Gheorghe Şimon: "The royalties law will be voted in the Parliament in February next year" 

Ministry of the Economy: "We will establish royalties which are fair both for the state as well as for the business sector"

Daniel Cătălin Zamfir, PNL: "I found out that there are companies that have never, take note, never paid even one leu in royalties to the Romanian state, even though they have been exploiting resources for over 20 years"

Last year, the Court of Auditors announced that Romania lost 1.4 billion dollars, because the ANRM established the oil royalties in a flawed manner

The entire legislative package concerning the regulation of the system for the regulation of the mineral, oil and hydromineral resources will be revised and will be voted in the Parliament in February next year, Economics minister, Gheorghe Şimon, announced yesterday, after the debates of the Economic, Industries and Services Commission of the Senate.

According to him, the Ministry is going to conduct a thorough study, in order to make the royalty fair.

Gheorghe Şimon said, quoted by News.ro: "There is no rule (concerning the raise or drop of the royalties - ed. note), we need to conduct a thorough study for the draft law to be fair to us and the business sector. We will establish royalties so that the state isn't fleeced, but also so we don't kill off the business sector. We need investors in this country".

According to him, the state helping the business sector is a normal and common sense economic principle: "Even if the state will charge this royalty, it is a lot lower than what the Romanian state could earn though taxes when the business sector is developing. That is the idea of the royalty overall, and for geothermal waters, crude oil and gas in particular".

The Ministry of the Economy had put the draft law for the regulation of the royalty system for the concessions of mineral, oil and hydromineral resources up for debate on October 23rd.

According to the proposal, the royalties for on-shore (on land) exploitations were left unchanged, between 3.5%-13.5% of the value of the deposits' output, depending on the size of the exploitation, and in the case of off-shore natural gas deposits, a fixed quota of 10% would be set for the entire extracted volume and a variable one of 2% and 3%, depending on the extracted volume.

Radu Dudău, former advisor in the Ministry of Energy, said that the new proposal was discouraging investors, on the offshore side.

Now, legislation on royalties will see a new postponement, even though PM Mihai Tudose had announced they would be raised starting in 2018.

PNL senator Daniel Cătălin Zamfir, the president of the Economic Commission, yesterday wrote on Facebook, that he found out during the debates that there are companies that have never paid one leu in royalties to the Romanian state, even though they have been exploiting resources for over 20 years: "Incredible! Unimaginable!".

Today (ed. note: yesterday) the hearings of the Economic Commission of the Senate, the Minister of the Economy, Gheorghe Şimon, confirmed the plunder overseen by the National Agency of Mineral Resources!

"I found out that there are companies that have never, take note, never, even one leu in royalties to the Romanian state, even though they have been exploiting resources for over 20 years!

The employees of the Stat have not monitored the payment of the royalties and when they did and found that they weren't getting paid, they did not withdraw those licenses and they weren't concerned with recouping the debts!

We have asked the newly installed management of the ANRM to urgently recoup the huge amounts owed to the Romanian state and in doing so to present a detailed report of the situation.

There has constantly been talk about the plundering of the country, but I never imagined something like this, for so many years, with the complicity of the authorities of the State!

By the way, shouldn't other entities of the State intervene?"

Daniel Zamfir said that he wasn't talking about the oil sector.

The Court of Auditors said, in a report announced for 2011-2015, that the National Mineral Resources Agency (ANRM) did not enforce the law and set a reference price for the natural gas extracted from Romania under other circumstances than the ones set through the Oil law of 2004, which led to the drop of the oil royalty owed to the state budget by approximately 4.67 billion lei (1.4 billion dollars).

Recently, Iulian Iancu, the president of the Commission for the Investigation of the ANRE in the Chamber of Deputies said, in the Commission, that Dumitru Costin, the head of the National Union Block (BNS) presented documents according to which OMV Petrom prejudiced the Romanian state by 7 billion lei.

According to Iancu, Costin claimed that he had received from the Romanian authorities documents concerning OMV, which describe investigations at various stages concerning tax evasion when it comes to salaries, VAT, the modification of the formula and the incorrect payment of royalties by OMV.

OMV Petrom denied the accusations that it failed to pay its taxes, which were made in the November 9th session of the Parliamentary Commission for the investigation of the activity of the ANRE. The representatives of the company said: "Over the years, the company has been the subject of several audits by the tax administration, which have been completed. The last fiscal audit, which concerned the oil and natural gas royalties for the 2011-2015 period, was completed without any findings in the second quarter of this year".

The new royalties law is going to replace the new system for the taxation of oil and gas resources, system which had been established since back in 2004, when Petrom, the biggest oil company in Romania. The contract for the privatization of Petrom since 2014 stipulated that the level of the royalty would remain unchanged for ten years.

Şimon: "We would need two more Cuprumin to be able to justify a plant for the processing of copper ore" 

The building of a plant for the processing of copper ore would be justified if it was going to process at least 120,000 tons, but Cuprumin can only deliver 35,000 tons of ore, Economy minister Gheorghe Şimon Tuesday, told the Economic, industries and services Commission in the Senate Tuesday.

"We have not abandoned the idea of Cuprumin, just like we haven't abandoned many other companies that are part of the portfolio of the Ministry of the Economy. The environmental permit will be obtained. We have made investments towards that goal and the environmental permit will be extended. These issues will be seen through. We have talked to the people in charge of environmental issues. We are on schedule this time. The issue with mining that we have in Romania is the following: there is no more mining. Sure it is tragic for the Romanian state to sell a resource. Cuprumin sells a resource. It exploits an ore, transforms it into concentrate and then it gets sold abroad. So it is leaving Romania. It would have been very good if it were staying in Romania. We have the intention to build this plant to obtain electrolytical copper. In order to get electrolytic copper we need the plant which needs to be designed for at least 110-120,000 tons. That is where it would be profitable. Today, Cuprumin only delivers 35,000 tons. We would need two more Cuprumin so we can justify a plant", said Gheorghe Şimon.

He stated that the Romanian state did not legislate the reopening of mines, and this aspect is awaited through the new Mining law.

The Minister of the Economy said that the intention was to reopen mining where possible and he brought up the situation of Remin Baia Mare.

The Minister of the Economy: "I am not pleased with the way things are going at Salrom"

On Tuesday, Economy minister Gheorghe Şimon said that he was unhappy with the way the activity at Salrom was going, because even though its profit had doubled, the investments were small and not even those had been fully realized.

"I will admit from the start that things aren't going perfectly at Salrom either. I am not pleased with how things are going over there. I have no problem with corporate management, I really don't. I take it as it is and I believe that this management needs to produce results. There may be other reasons why it isn't producing results. And I am referring to what? As minister of the Economy I am not interested that much in the profile that Salrom is making. It doubled its profit in 2017 compared to 2016. I am not interested that much in that. Of course I don't want to see it losing money. I am interested in how much Salrom invested, and sure, I am interested in it making a profit, but also in how much it has invested. And I didn't like it at all when I saw a position of the directorate of Salrom contrary to mine concerning investments. Aside from the fact that the amounts to be invested in 2017 were smaller, those investments weren't even completed. The investment program was only achieved at a 74% or 76% rate", said Gheorghe Şimon, in the works of the Economic, Industry and Services Commission in the Senate, according to Agerpres.

He admitted that overall, Salrom makes a profit, but there are mining units that are losing money, one such example being the Cacica mine, which has the purest salt.

According to the minister, the company's next year's budget will be one directed towards investments.


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